How Modern Invoice Finance is Challenging Traditional Lenders

According to research from software specialist Comarch, more than half of small to medium sized businesses are unhappy with traditional lenders.

Why is this?
The same study has shown that nearly half of small business owners worry about cashflow. The damning statistic of 1 in every 3 startups failing within the first three years, teamed with the slow crushing of independent businesses by corporate giants, doesn’t make for relaxing bedtime reading. In fact, under 30 percent of businesses agreed with the statement that the way traditional lenders operate restricts the growth of their company.
Why do you lack confidence in traditional lenders?
Confidence in traditional lenders (and finance application success rates) has dropped in recent times. Many businesses now find they have to perform circus tricks to keep hold of the money they fought to borrow in the first place;their credit limits have dropped; or their interest charges have increased. For small businesses lucky enough to get a loan, overdraft or credit card, the credit available may have little flexibility and is only available for specific fixed periods.
How does modern invoice finance work?
Modern invoice finance such as that offered by Platform Black is regarded as the ‘new generation’ of more traditional invoice finance products such as invoice discounting and factoring. Although these solutions have worked, and continue to work, for many businesses – leaders of today’s firms are increasingly turned off by lengthy contracts and the lack of flexibility.
Now, businesses are able to quickly sell their invoices to investors in an online auction – while staying fully in control of the costs, the number of invoices sold and the repayment period – and with full confidentiality.
Investors bid to finance the invoice via an online platform, which drives down the cost of the finance for the business,as competition is generated among investors – finance costs have been bid down as low as 0.5% per 30 day period. Cash is paid out a day later, and repayment terms can be 30, 60 or 90 days – again, these are set by the business.
So why is this challenging traditional lenders?
Because Invoice Trading is a new, innovative form of lending that suits the needs of businesses much more than the expensive and restrictive offerings of bank loans and overdrafts, and the inflexible and onerous terms of invoice discounting and factoring.
Invoice Trading turns outstanding invoices into cash the day after the auction closes.
So, next time your financial advisor or accountant points you straight towards your nearest bank when you have cashflow problems, discuss the merits ofInvoice Trading with them for your business. It is challenging traditional lenders and rapidly growing in popularity – it’s just up to you to take advantage ofit.
Beth Nicholasis a writer and a lover of great finance solutions for business. She’s written for a number of money and business blogs in her time.